May 25th 2016: Gold to hit $100?

• This morning, the US dollar is on the back foot after the dollar index closed at its highest level for over two months last night. The USD/JPY is following suit and tucking back so far this morning.

• Gold was one of the biggest movers yesterday, erasing all the gains since the end of April. Some analysts have been predicting that the decline could well stretch down to $100.

• There were big moves yesterday for the pound and euro, with the EUR/GBP suffering large falls. Large gains for the ‘remain’ camp in the Brexit referendum polls appear to have lifted the pound while poor German economic sentiment figures and another Greek bailout deal have hit the euro.

• Coming up today we have German Ifo business climate at 09.00.
• Following this, we have the Canadian BOC rate statement at 15.00 with no change expected.
• Crude oil inventories follow at 15.30.

Trade Idea: 

• Gold declines such as this have often been reversed in the short term, especially on the back of a single day drop. There may well be a further downside from here, but in the short term, there’s an upside angle.

• A good way to play this is a HIGHER trade predicting that gold closes above $1235 in 14 days for a potential return of 149%.

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